Section Five
A comprehensive study by Matt Bloom of compensation
and performance in baseball has provided good insights into
the effects of pay compression and dispersion. The study found
that great dispersion in compensation between the members of
a team impairs team performance. The research, which studied
team and individual player performance and compensation for
1,644 players over nine years, found the following results:
Findings suggest more compressed pay
dispersions are positively related to multiple
measures of individual and organizational
performance... The results of this study indicate
that greater dispersion in pay within an
organization is associated with lower individual
and group performance, at least where work
interdependencies are important.^20Diversity
Research on the creativity of groups has found that ethnic
diversity is positively related with cre-ativity.^21 Correspondingly,
it has been asserted that the heightened creativity produced by
a more diverse workforce can have a positive impact on the
firm’s performance if properly managed. While it is a desirable
practice to hire people who will fit well with the organization,
this practice can result in dysfunctional homogeneity if carried